In order to increase production capacity, Gunning Industries is considering replacing an existing production machine with a new technologically improved machine effective January 1. This information is being considered:

• The new machine would be purchased for $160,000 in cash. Shipping, installation, and testing would cost an additional $30,000.
• The new machine is expected to increase annual sales by 20,000 units at a sales price of $40 per unit. Incremental operating costs are comprised of $30 per unit in variable costs and total fixed costs of $40,000 per year.
• The investment in the new machine will require an immediate increase in working capital of $35,000.
• Gunning uses straight-line for financial reporting and tax reporting purposes. The new machine has an estimated useful life of 5 years and zero salvage value.
• Gunning is subject to a 40% corporate income tax rate.

Gunning Industries' initial net cash outflow in a capital budgeting decision would be:

Group of answer choices

$160,000

$190,000

$225,000

$195,000